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Wills and Trusts Basics

By: Shelly Wald Harris
Partner, Shutts & Bowen LLP

Wills and trusts should include the following information:

  • Identification of spouse and children and potentially grandchildren and other family members based on the circumstances, whether included or disinherited. There are many cases that revolve around identification of a beneficiary, and a clear statement of the family members is helpful to the process. Also, care needs to be taken because sometimes the boilerplate definitions of the words “descendant” and “issue”-especially those relating to adoption and stepchildren-can conflict with the client’s perception of descendants and issue.
  • Wills should contain a statement including special requests regarding burial and any requests regarding cremation. They should also include any request regarding a client’s final disposition if the client believes that a dispute between or among the client’s spouse and children may arise as to what to do with the body. As a matter of practice, I include these statements, as well as statements regarding organ and body donation in the health care surrogate because, as a matter of course, the health care surrogate is reviewed during the client’s life, and the will may not be reviewed until after the final disposition of the client’s remains.
  • Wills and trusts should obviously provide for the distribution of assets. The distribution should contain several layers of contingencies in case individuals predecease the client or the term of the trust. The number of alternate beneficiaries differs with the circumstances. A distribution that is outright to descendants only may be sufficient if the client has several children who each have several children of their own. But if a client has only one child, several backup distributions may be warranted, especially if the backup beneficiary is the same age as (in the case of a sibling) or older than (in the case of a parent) the client. Further, because anti-lapse statutes are not always clear or consistent, it is best to clearly designate in the instrument whether a beneficiary’s descendants take the place of the predeceased beneficiary or whether that distribution lapses.
  • In the same line of thinking, a client needs to provide not only for fiduciaries, but also for backup fiduciaries. If a client names a corporation as a fiduciary, the client should specify whether he or she intends that any successor also be a corporate fiduciary. For example, in one case, I have seen a corporate co-trustee resign because the individual co-trustee would not cooperate in the prudent management of the trust funds. The result of the corporate resignation was to make the uncooperative trustee the sole trustee, leaving the trust vulnerable and not protected as anticipated by the settlor. Further, a client should provide for how a vacancy in the fiduciary position will be filled, especially if the client has clear understandings of whom he or she does not want as a trustee-e.g., when a client does not want a beneficiary to serve as his own trustee.
  • Consideration should be given as to how to remove a fiduciary. For example, if the fiduciary is declining in health, what is the standard that is required for removal? Under what circumstances should a beneficiary be able to remove a fiduciary? If there is a corporate fiduciary, it may be prudent to allow the beneficiary to remove and replace a corporate fiduciary with another corporate fiduciary.
  • Clear guidance on the payment of taxes should be spelled out.
  • Broad powers should be granted to the fiduciary, including the power to engage in transactions with other trusts for the same family for which the fiduciary also serves as trustee. New powers that we are including in all new trusts and wills are powers relating to electronic information, as individuals accumulate more electronic information.
  • With respect to trusts, the governing law of the trust should be spelled out.
  • Special assets should always be considered. Will a trustee have a potential conflict of interest with respect to an asset, such as a business? How will special assets, such as an operating business, be managed until it is distributed?

Managing Disputes Over Wills and Inheritance: Leading Lawyers on Navigating Clients Through Probate Contests (Inside the Minds)

This article is an excerpt from Inside the Minds: Managing Disputes Over Wills and Inheritance: Leading Lawyers on Navigating Clients Through Probate Contests 2014, ed. This excerpt was provided by Aspatore Law Books, part of Thomson Reuters. Aspatore books were originally created for a legal professional audience, but have since become popular with non-attorneys thanks to easy-to-understand writing and smart, real-world insights. You can find the entire book available for purchase on the Thomson Reuters Legal Solutions website by clicking the book title linked above.